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Retail Report: Planning for 2012

Increasing retail prices stall first-quarter sales

Property of SeaFood Business magazine

December 05, 2011

As the first quarter of 2012 approaches, examining first quarter 2011 sales can help anticipate what to expect for seafood department performance in the coming months. Given the challenging conditions throughout 2011, the first quarter of 2012 is full of hurdles but also positive factors.

In the first quarter of 2011, the department’s average retail prices increased more than 7 percent versus the same period in 2010, causing supermarket sales to take a hit.

Department dollar sales decreased 1.5 percent in the first quarter, which was contrary to all other fresh departments. This decline was in line with 2010 declines; however, it was against growth trends seen between 2005 and 2009.

The most successful sales weeks for this year’s first quarter were the weeks surrounding Valentine’s Day as well as during Lent. With the exception of the Lenten season in 2011, seafood generally underperformed compared with first-quarter sales during the previous year.

Fresh seafood historically has accounted for the largest percentage of department sales, and the first quarter of 2011 held this trend. Fresh seafood comprised 79 percent of department sales, down from an 80.2 percent contribution in the same quarter of 2010.

Where fresh seafood lost dollar share, prepared seafood gained. Prepared seafood’s contribution to the department rose from 15.9 percent in the first quarter of 2010 to 17.2 percent in the first quarter of this year.

Regional seafood sales trends reflected the broader U.S. trend, where fresh and other seafood lost share and dollars, as prepared seafood gained. While prepared seafood increased dollar contribution in all regions, the West region had the largest growth with a 2.1 percentage point increase. The West region also had the largest decline in fresh seafood dollar contribution to the department, down 2 percentage points.

Consumers shifted away from the “other” seafood category (sauces, dips, spreads) during the first quarter, particularly in the Central region, where it had its largest contribution decrease. The Central region and East region, however, had the smallest dollar contribution decreases in fresh seafood.

Just as dollar contribution fluctuated across the country in the first quarter of 2011, dollar-sales changes were apparent in each U.S. region as well. The largest changes in prepared seafood were driven by growth in the West, where weekly dollar sales per store increased more than 8 percent. Fresh seafood had the smallest decline in the Central region and the largest decline in the West. Moreover, other seafood’s largest decline was in the West (9.1 percent) during the first quarter.

Across the United States, finfish maintained its leading position in seafood department sales. However, in the first quarter 2011, seafood meals and other prepared seafood, which include smoked fish, skewers and stuffed fillets, had the largest growth in dollar sales (9.3 percent and 4.9 percent, respectively).

Regionally, sales and share trends were generally in line with national trends. Finfish had the highest dollar sales in all regions; however, growth varied across the country. In the East, seafood dips and spreads had the largest growth, while in the South, other prepared seafood had the largest increase. The West and Central regions followed U.S. trends, with seafood meals having the greatest growth. In contrast, all regions had four or more categories decline. Specifically, sauces and seasonings, shrimp and crustaceans had sales declines across regions. Crustaceans had the largest contribution decline across the board, largely due to steep price increases.

During the first quarter of 2012, it is expected that the negative relationship between increasing prices and decreasing sales could continue. However, a recent decrease in gas prices may mediate any drastic changes.

Heading into 2012, retailers are trying to find ways to differentiate their businesses from competitors, as well as ensuring the right products are in the right stores at the right time. Many retailers strive to add value to the seafood department by boasting sustainability and locally sourced seafood. Ultimately, the dynamic retail environment and increasingly complex department will make staying profitable in the first quarter 2012 an arduous task.
 

This sales review is provided by the Perishables Group in Chicago, an independent consulting firm focused on innovation and creating value for clients in the fresh food industry. Reported results are for the first quarter 2011 representing approximately 63 percent of national supermarket ACV share. Sales data provided by Perishables Group FreshFacts® powered by Nielsen.

December 2012 - SeaFood Business 

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